Keeping you up to date on the latest data releases.
Real GDP decreased at an annualized rate of 0.1 percent in the fourth quarter of 2012, compared to a 3.1 percent gain in the third quarter, and disappointed even the most pessimistic private forecaster (Bloomberg’s panel of forecasters ranged between an increase of 0.5 percent to 2.6 percent). Smoothing over the past two quarters, real GDP increased 1.5 percent, compared to 1.6 percent in the first half of the year. Real GDP growth for 2012 (Q4/Q4) as a whole increased 1.5 percent, compared to a 2.0 increase in 2011. Fourth quarter real GDP was primarily pulled down by two transitory factors that subtracted nearly 2.6 percentage points (pp) in Q4 real GDP growth, the largest of which was from a downward swing in private inventories that subtracted 1.3 pp from Q4 real GDP growth. This came on the heels of a positive 0.7 pp contribution to Q3 growth from inventories. The second temporary downswing came from federal government consumption and investment, which plummeted by roughly 15 percent in Q4 (its sharpest contraction since 1973:Q3), subtracting nearly 1.3 pp from output growth. This was driven largely by a sharp 25 percent decline in real national defense consumption expenditures, that overshadowed a 15.1 percent jump in Q3.
The last bit of negative news was that real exports fell 5.7 percent in Q4, posting its first decrease since 2009:Q1, and subtracted 0.8 pp from real GDP growth. This series, which the Burea of Economic Analysis has scant data on as of the advance estimate, was up 3.2 percent over the previous four quarters.
On the positive side, this release showed some firming in consumption and private investment. Real personal consumption expenditures rose 2.2 percent in Q4, compared to a 1.6 percent gain in Q3, and slightly above its four-quarter growth rate of 1.9 percent. Nonresidential investment jumped up 8.4 percent in Q4, after slipping down 1.8 percent in Q3. The upswing was due to a sharp jump up in equipment and software investment (up 12.5 percent). Also, residential investment continued its upward climb (albeit from a very low level), rising 15.3 percent in Q4. Residential investment is now up 14.4 percent over the past year, its strongest growth rate since mid-1992.